Please let me know if these numbers make sense. I'm thinking of taking out a home equity loan of $100k at 4.77% on my house to purchase and investment condo with purchase price of $132k. These condos rent well and go for $1200/month. Monthly HOA is $185. Estimated property tax is $700/yr. The condo needs about $2k worth of improvements before I rent it out. My main question is does a home equity loan make sense considering I'm having a hard time getting a loan otherwise send its only 40% owner occupied. Thank you in advance.
@Robby Stelly wow! 4.77% is nuts...you should be closer to 3% on a HELOC...with no out of pocket for closing...and 90+LTV...interest only payments on a 10 year note...
Are you with a local bank or credit union?
Why do you want to buy a condo...there are a ton of better things you can do with the cash...
If you do decide to utilize the heloc, check out the P.I.L.L. method as far as how to pay it off in less than 10 years. Understanding how to properly utilize this method has been a game changer for me.
That rate is for a 15 year fixed home equity loan. Thanks for advice
I think you are better off getting the HELOC and looking for some BRRRR deals. That way you can use that equity over and over to build a nice little portfolio and diversify some. Otherwise you will be tapped out after this one deal and looking for money again.
Also, I didn't run the numbers but it looks kind of skinny since the rent is less than 1% of the purchase price and you have to tack on the condo fees as well.
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